"What Makes An Antifragile Business?"

What is an antifragile business?

It’s the ability of a biz to quickly adapt to disruptions while maintaining operations and safeguarding people, assets and overall brand equity.

When it’s hit with things like:

Inflation
Recession
Covid lockdowns etc

Its processes keep running smoothly.

This is accomplished with:

No debt
Low overhead / Fixed costs / Expenses
Big cash reserves
Multiple independent products / Industries / Lines of biz
Flexible workers
No single point of failure
Back-up systems for core processes.

Let’s break em down.

Table of Contents

1. No Debt

If you build your biz with debt, you are at the whims of the debtor.

If the debtor gets rugged, so do you.

Just look at the Silicon Valley bank failure.

1,000’s of startups had over 90% of their cash tied up in it.

(And 10,000+ will also be impacted to some degree).

This means if they fail to make payroll in 1 month, over 100,000+ people will potentially lose their jobs.

High debt + illiquid assets = bankruptcy.

There are many ways to make money, but the main ways to lose are: over-leverage and over-exposure.

2. Low Overhead / Fixed Costs / Expenses

Avoid all businesses that:

Aren’t liquid
Are capital intensive (require lots of $ / high volume of production / high levels of depreciation)
And have cutthroat margins.

Why?

Unless you have a seriously unfair moat, you won’t be able to compete.

An antifragile business has:

Low overhead = making more $ with less ongoing costs
Low fixed costs = it doesn’t take much to keep your biz running
Low expenses = doesn’t cost much $ to produce goods with asymmetric value

3. Big Cash Reserves

Cash buys you time.

It also allows you to weather ups & downs.

This improves the quality of your decision making because you’re coming from a place of abundance and aren’t in a rush.

(And all of this compounds into an upward spiral).

Better decision making = more cash.

More cash = room to make better decisions.

4. Multiple Independent Products / Industries / Lines of Biz

Multiple lines of biz ensure everything keeps running smoothly even if one takes a hit.

This is done by bundling all your streams into one “income tributary“.

Example: PLBY Group (Playboy Group)

This is the famous global media & lifestyle company founded by Hugh Hefner.

It sells:

Exclusive entertainment events
Consumer products
Magazines
Licensing
Alcohol
Clothes
Games

And more.

What are some evergreen niches you can sell solutions in?

47+ Profitable Niches

5. Flexible Workers

If you have employees or VA’s and they can’t adapt to changing market conditions, you’re building your biz on shaky ground.

6. No Single Point Of Failure

You’ve heard all the horror stories.

Supply chain issues
Bank accounts seized
Ad accounts getting shut down
Social media accounts banned
Payment processors randomly blacklisting people

Every point of failure is a bottleneck.

The performance of a system is always limited by the availability of a critical input. Eliminate the constraint, and performance will improve. Make sure your constraints are NEVER starved.

A highly interdependent system is “tightly coupled”.

The more tightly coupled, the more failures / delays will effect other parts. (Time dependent / rigid ordered / no slack).

Example: Rube Goldberg machine.

“Loosely coupled” = low interdependence. More relaxed, more slack, not time dependent, able to use “parallel processing” (completing multiple steps at a time).

Example: Orchestra. A sour note will effect quality, but won’t cascade.

You make a system less interdependent by removing dependencies. (Input required before the next stage). The more dependencies, the higher the likelihood of delay or system failure.

To understand a system, focus on subsystems and their triggers / endpoints / IN / OUT flows.